Tax relief for listed buildings

Like most properties, listed buildings are eligible for capital gains tax relief. Relief also applies to houses that are ‘gifted’ to the Government or local authority, or bodies like the National Trust and Historic England.
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So far all that you’ve read about listed buildings might point to them being very costly properties to purchase and maintain; you might even have found that out first hand. There are schemes in place which can provide some relief however.

Tax Relief

Like most properties, listed buildings are eligible for capital gains tax relief. Relief also applies to houses that are ‘gifted’ to the Government or local authority, or bodies like the National Trust and Historic England. These are exempt from inheritance tax. If a fund is set up to maintain the property’s outstanding architectural or historic interest, then costs associated to the property fund are also exempt from tax.

Inheritance tax is normally payable on the death of an owner or on a gift, unless the asset lands in one of the following categories:

  • Objects or collections of distinguishing national, scientific, historic or artistic interest
  • Land of outstanding scenic, scientific or historic interest
  • Buildings of outstanding historic or architectural interest
  • Land essential for the protection of the character and amenities of an outstanding building
  • Objects historically associated with an outstanding building

Selling a listed property

If the property is sold on the open market, the tax exemption will be lost and the seller may also be liable to capital gains tax on the sale proceeds. That said, if the property is sold by Private Treaty to a body such as Historic England, then the conditions of tax exemption will be upheld. The downside is that sellers should expect a lower offer than if the sale proceeds were taxable.
The new owner must undertake that access will be provided for the public and that steps will be taken to maintain, preserve and repair the building.

The Department for Culture, Media and Sport administers an ‘acceptance in lieu’ scheme where taxpayers can transfer their property to the public for an Inheritance Tax liability. Often the property will achieve a higher value, which is bequeathed to a museum or other public institute, than if the property were simply auctioned off.

VAT

VAT applies to all building materials and services used in the course of approved alterations or renovations to listed buildings. Private treaty sales to public bodies are relieved from VAT.


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